Simplifying complexity: Rationalising water entitlements in the Southern Connected River Murray System, Australia

Water markets have the potential to greatly improve the productive use of water by reallocating entitlements to where they are most highly valued. However, water markets do not always function efficiently because the property rights structure initially was not designed for market transactions. A major challenge dominating Australia's water reform agenda is to rationalise the complex and inconsistent water entitlements within and across jurisdictions to facilitate markets. In this paper, a classification framework was developed to identify entitlement types and specify entitlement attributes, and alternative entitlements arrangement options are proposed to minimise transaction costs and streamline administrative processes. Although the study focuses on the reform of water entitlements systems in the Australian context, its broad implications are briefly discussed.